Senate GOP divided over House demands for spending cuts

Senate Republicans are deeply divided over demands by House conservatives to cut at least $1.5 trillion, and possibly more, from the federal budget over the next decade, putting Senate Majority Leader John Thune (R-S.D.) in a tough position.

Thune acknowledged to reporters Thursday that his Senate GOP colleagues are divided over how much to cut from the federal budget to offset the cost of extending President Trump’s 2017 tax cuts and other Trump priorities.

“We got folks on both sides of that issue, we’ll have to sort it out,” Thune said when asked about GOP senators who are worried that Republican leaders have set too ambitious a goal by pledging to cut $1.5 trillion from the federal budget over the next decade.

Speaker Mike Johnson (R-La.), appearing at a Thursday morning press conference with Thune, told reporters that GOP leaders are “committed to finding at least $1.5 trillion in savings for the American people” and promised to “aim much higher” in finding government programs to cut.

That’s going to be tough promise for Thune to deliver on in the Senate, where a handful of Republican senators have warned they will oppose steep cuts to Medicaid.

Sen. John Cornyn (R-Texas) said that it won’t be easy to get Senate GOP moderates and fiscal hawks on the same page.

“I think it’s going to be hard,” he said. “But we don’t have a choice, and we need to get to work on the reconciliation bills.”

Cornyn applauded the House for passing the budget resolution that senators passed early Saturday morning, but he warned there’s still a lot of negotiating to be done to produce a bill to secure the border, expand domestic energy production, increase defense spending and cut taxes.

The biggest obstacle to getting a deal is getting a majority of Republicans in the Senate and House to agree on how much to cut spending to keep federal deficits in check. Just extending the 2017 Trump tax cuts would add a projected $4.6 trillion to the debt, according to an estimate from the Congressional Budget Office.

“The hardest part is yet to come,” said Cornyn who sits on the Senate Finance Committee, which has jurisdiction over tax policy and Medicaid.

Sen. Susan Collins (R-Maine), who faces a tough re-election next year, voiced her concern Thursday over cutting hundreds of billions of dollars from Medicaid, fearing such a big cut will likely entail a reduction in benefits.

“I could not have made my position on Medicaid cuts clearer. I am not going to support cuts that affect low-income families, disabled individuals, low-income seniors, rural hospitals,” Collins said.

But she said she is “open to a work requirement for able-bodied individuals who do not have pre-school children.”

Republican Sens. Lisa Murkowski (Alaska), Josh Hawley (Mo.) and Jerry Moran (Kan.) have also warned against deep cuts to Medicaid.

The Congressional Budget Office estimated in 2023 that adding work requirements to Medicaid could save $109 billion over ten years.

Collins said Republicans also need to be cautious about slashing the Supplemental Nutrition Assistance Program, which provides food benefits to low-income families, another budget-cutting target identified by fiscal conservatives.

“I think we have to be very careful to make sure — given the cost of food — to make sure we’re not having cuts that leave people hungry,” she said.

A group of Republican senators balked Thursday at conservatives’ demand to cut clean energy investments funded by the Inflation Reduction Act (IRA), two of former President Biden’s major legislative achievements.

Billions of dollars in clean-energy investment have gone to Republican-leaning states and congressional districts.

Republican Sens. John Curtis (Utah) and Thom Tillis (N.C.) joined Murkowski and Moran in sending a letter to Thune this week, warning that repealing energy tax credits from the IRA would hurt businesses and jobs.

“While we support fiscal responsibility and prudent efforts to streamline the tax code, we caution against the full-scale repeal of current credits, which could lead to significant disruptions for the American people and weaken our position as a global energy leader,” the senators wrote.

Thune will need to balance the demands of these Republican senators with those of fiscal hawks, such as Sen. Ron Johnson (R-Wis.), who say Congress needs to cut much more than $1.5 trillion from federal programs over the next 10 years.

Johnson said he wants to cut “way more” than $1.5 trillion over the next decade.

“That’s way too meager,” he said of the $1.5 trillion target for spending cuts unveiled by Thune and Johnson.

Johnson said “Medicaid is completely out of control,” citing massive expansion of federal Medicaid funding under the Affordable Care Act, former President Obama’s signature achievement.

“The part of it out of control is ObamaCare, Medicaid expansion, where we pay way more for single able-bodied adults than we do for disabled children. That’s a scandal right that. The result of that is that the states have completely gamed the system,” he said.

Johnson lamented the shift in Republican sentiment over the past 10 years, noting that Republicans were set to repeal the Affordable Care Act’s expansion of Medicaid during Trump’s first term.

“We were all going to repeal it, weren’t we? And now all of the sudden we can’t touch it,” he said.

But Tillis, the senior Republican senator from North Carolina, who faces a tough re-election race next year, said that Washington policymakers can’t simply cut tens or hundreds of billions of dollars in federal Medicaid funding that states have come to rely on.

He said that state-level leaders agreed to expand Medicaid because the federal government promised to cover a large portion of the cost. He argued it would be unfair to suddenly pull that federal funding away without ample study and warning.

Tillis pointed out that North Carolina has a “trigger mechanism” for its Medicaid program under which “if the deal changes with the federal government, the expansion ends.”

He said there would need to be a “transition” period to allow states to adapt to lower federal funding, instead of simply cutting federal Medicaid funding “cold turkey.”

Thune also needs to worry about Senate defense hawks who are demanding big defense spending increases, and fiscal conservatives who say that $1.5 trillion in spending cuts over the next decade won’t go far enough to cut projected deficits.

One Republican senator who supports higher defense spending said the budget reconciliation package that leaders hope to pass later this year needs to boost the Pentagon’s budget by at least $150 billion.

“That’s a minimum. We have to stay at $150” billion for defense, the source said.

House Republicans have suggested increasing the Defense Department’s budget by $100 billion, instead.